What happened to the Consumerism in Healthcare Revolution?
Can consumers differentiate value and quality between health services and products?
In recent years, there has been a growing trend discussing the concept of consumerism in healthcare services. Consumerism is often defined as: “the protection or promotion of the interests of consumers.” Yet others define it as “a social and economic theory that promotes the idea that people should constantly consume goods and services, even those that aren't necessary for survival or status.” It's driven by advertising, mass media, and a competitive market economy (in some circumstances). For the sake of this article, we will be discussing how the term is most often used in the contemporary discussions on the future of healthcare, where most use it to suggest that the American public is becoming increasingly interested in shopping around for health-related products and services and that the future of healthcare business should adapt to use strategies from other consumer-focused markets (e.g., consumer packaged goods, digital media, entertainment.)
For the sake of this article, it also implies that consumers have the power to make informed choices, can differentiate between the quality of similar services, and are influenced by marketing strategies. Proponents of this model suggest that consumers can assess the quality of health services, and that through providing consumers with optionality (i.e., improving consumer choice rather than insurance company network rules) to select the service that provides them the most utility, the concept can promote competition. Competition, as classical economics suggests, puts pressure on firms in a market to improve quality and reduce price, thus delivering consumer value. This is in contrast to the current system where most purchasing decisions are made by insurance companies or government purchasers rather than the consumer who is simply routed to “in-network” locations. Thus, rather than shopping around for the best value, consumers/patients are at the mercy of the profit motives of the firms in the system resulting in higher costs and lower quality.
This conceptual framework of “promoting consumerism in healthcare markets” depends entirely on the capacity of the consumer to determine the quality of a service and the ability of the patient to differentiate between “good quality” and “bad quality.”
Importantly, as a brief aside, I will be discussing “medical grade” products and services in this article and not fitness or health-related products like certain exercise mobile applications, wearables, sleep trackers, and more. This is an important distinction as these products do mirror other consumer markets.
Consumerism in Traditional Markets
To understand the concept of consumerism and consumer choice, it's helpful to first examine how it functions in other markets. Let's consider two examples: soft drinks and restaurants.
In the soft drink market, consumers have a wide variety of choices. They can easily compare prices, flavors, and nutritional information. Brand loyalty plays a role, but consumers can readily switch between products based on their preferences, budget, or health considerations. The competition between major brands like Coca-Cola and Pepsi, as well as numerous smaller players, drives innovation and keeps prices relatively stable (although small brands are often purchased by the large companies thus reducing real competition).
Similarly, in the restaurant industry, consumers have abundant choices. They can compare prices, read reviews, and assess the quality of food and service based on personal experience or recommendations. If a restaurant charges too much for subpar food or service, consumers can simply choose another establishment. This ability to "vote with their feet" forces restaurants to maintain quality and competitive pricing or risk losing business. In major cities, restaurants are very competitive with each other and thus quality and service are a key focus. We all know when we finish a meal at a new restaurant if it will be successful or not based on the value we receive. Value is a function of the price, the quantity of food, the quality of food, the atmosphere of the restaurant, and the service quality.
This is the type of focus that proponents of “consumerism” in healthcare services are looking to create via greater consumer choice and autonomy in their purchasing decisions. From a classical economics perspective, this is a good thing.
These examples illustrate three key aspects of functional consumerism:
1. Competition: Multiple providers offer similar products or services. There are options from which to choose. A single provider of a good or service in a given market is a monopolist. In healthcare, which is a local service, we see many geographic markets with a single provider of a good or service.
2. Quality Assessment: Consumers can easily evaluate the quality of the product or service. They know inherently or over time whether they attribute high quality to a brand or product.
3. Price-quality Relationship: There's a clear connection between the price and the perceived quality. People have a general sense for cost and how it relates to quality can can readily determine their received value.
In these non-healthcare markets, if a price is too high for the quality offered, consumers have the power to choose alternatives or to forgo the product or service all together. This choice is possible because there are many options available, and the information needed to make decisions is readily accessible and clearly evident. This is also an area that differs between healthcare and other consumer markets: you often cannot choose to forgo healthcare in light of low value or high prices as it can be a life altering need.
The Reality of Healthcare Markets
When we apply these principles to healthcare, we quickly see that the market operates very differently:
1. Limited Competition: Unlike the abundance of soft drink brands or restaurants, healthcare providers are often limited in a given area. In many regions, especially rural areas, patients may have only one or two hospitals to choose from. Specialist care can be even more restricted. Recent decades have brought unfettered consolidation among hospitals and insurance companies.
2. Difficulty in Quality Assessment: While it's relatively easy to determine if you enjoy a soft drink or a meal at a restaurant, assessing the quality of healthcare is far more complex. Patients often lack the medical knowledge to evaluate the appropriateness or effectiveness of treatments. Moreover, the outcomes of medical interventions can be influenced by numerous factors beyond the provider's control.
3. Lack of Price Transparency: In most consumer markets, prices are clearly displayed, allowing for easy comparison. In healthcare, however, prices are often opaque due to the complexity of billing and the involvement of third-party payers (insurance companies). Patients rarely know the full cost of a procedure or treatment until after it's been provided.
4. Urgency and Necessity: Unlike choosing a soft drink or a restaurant, many healthcare decisions are made under duress or in emergency situations. Patients may not have the luxury of time to "shop around" for the best value. Economists would refer to this concept as elasticity. The demand for many health services, such as emergency care, is inelastic, which essentially means the demand remains the same regardless of price.
5. Information Asymmetry: In healthcare, there's a significant knowledge gap between providers and patients. While you don't need specialized knowledge to choose a restaurant, making informed healthcare decisions often requires medical expertise that most patients don't possess.
The Challenge of Quality Measurement in Healthcare
The difficulty in measuring healthcare quality further complicates the application of consumerist principles. Unlike the straightforward metrics used in other industries where consumer satisfaction and preference is king (e.g., taste for soft drinks or flavor and ambiance for restaurants), healthcare quality is multifaceted and often subjective. Both subjective and objective measures are necessary to determine quality.
Some challenges in healthcare quality measurement include:
Outcome Variability: Patient outcomes can vary widely due to factors outside a provider's control, such as the patient's overall health, adherence to treatment, socioeconomic factors, and genetic factors.
Complexity of Care: Many health conditions require complex, multidisciplinary care, making it difficult to attribute outcomes to a single provider or intervention.
Long-Term Effects: Some treatments may have long-term effects that are not immediately apparent, making short-term quality assessments potentially misleading.
Patient Perception vs. Clinical Effectiveness: A patient's perception of care quality may not always align with clinical effectiveness. For instance, a provider with excellent bedside manner might be perceived as providing high-quality care, even if their clinical outcomes are average.
Risk Adjustment: Comparing providers fairly requires accounting for the different risk profiles of their patient populations, which is a complex and imperfect process.
Health is very complex: Health is a very complex thing to measure. It is affected by hundreds of factors that are complex in and of themselves. Thus, it is a challenge to evaluate and quantify health in many circumstances.
My Argument in Healthcare
Quality in healthcare is difficult to measure. We seek health services and products to either fix a problem or prevent one from occurring. Measuring this goal is called outcome measurement, which is what we want to do as much as possible. A high quality health service produces the desired effect (i.e., if you have an ear infection, you see a provider, you take an antibiotic, and you no longer have an ear infection).
However, it can be difficult to measure outcomes in many circumstances. So, we measure other things like processes (i.e., did a treatment or test occur) and structures (i.e., nurse-to-patient staffing ratios) that are associated with better health outcomes. For example, good diabetes care involves an HbA1C lab test, a foot exam, and an eye exam at least annually. Thus, we measure these processes for each patient with a diabetes diagnosis. To learn more about this check out this resource.
We also measure patient satisfaction and patient reported outcomes to determine the quality of a health service. While the gold standard is ensuring that the service or product provided actually results in the desired improvement in a health condition, satisfaction (i.e, am I satisfied with the services I receives, were they timely, was I treated with respect) and patient reported outcome measures (i.e., do I feel better? did my problem go away?). These are good to measure because when we cannot measure objective outcomes from a service, these can provide a glimpse at the concept of quality and because we want to ensure a positive patient experience.
Importantly, these quality measurement methodologies are most often performed by healthcare organizations, insurers, and government entities rather than consumers. These concepts are difficult to assess by consumers due to their complexity and esoteric nature. There are attempts to make public institutionally-collected quality metrics to support consumer choice, but questions remain about the utility and actual frequency of use by consumers.
The key question in “healthcare consumerism” is: can patients assess quality and value for their dollar? This is a nuanced question, but I generally fall on the side of the argument that patients are both unable to truly differentiate good quality care from bad quality care and face barriers to choice, aside from extreme or very clear circumstances. These edge cases might be a rude encounter with a clinician, a dismissive provider, a surgical error, or a significant adverse event.
Patients and their families can generally determine when the operations of a care delivery organization are very poor thus impacting the timeliness of services, wait times, or experience. Patients can even determine when the operations of a clinic are dysfunctional or potentially harmful (e.g., too many patients per clinician, not enough time spent with the patient.) Patients can certainly understand how the provision of a service makes them feel and they know when they feel like their valid concerns are dismissed or ignored. Patients know when they do not understand what to do and do not receive the right help or instruction. All of these things can impact quality of care and we know the patient satisfaction is associated with some quality of care indicators.
It is my well-supported opinion that patients have a good sense for bad care, but are unable to differentiate between decent care, good care, and excellent care because it requires medical and health background knowledge to determine. Patients also over index on their feelings (which is still important) about a care provider. For example, take a patient who really likes their long-time physician and trusts them. Yet, with the rapid advances in medication knowledge, the doctor prescribes a drug that is still effective, but moderately less effective than an alternative. The patient would report great medical care, but objectively, the patient may obtain better outcomes from a provider down the street who would have prescribed the most ideal drug for the patient. These types of practice variation examples happen very frequently and contribute to concerns around the patient’s ability to deem one service better than another.
Similarly, in this example, if the patient wants to get a second opinion on medication down the street, their insurance network might restrict their ability to go out of network. Thus, a price barrier may prohibit their choice. Additionally, their long-time provider stores their medical records, so if the patient desires to see another provider, the hassle and challenges associated with medical record interoperability and portability can be a barrier. Further, many local areas do not have other choices for specialists, primary care physicians, or hospitals. Thus, choice is physically restricted.
Importantly, patients do not, under the current financing systems, spend their own money. Rather, they spend a combination of their own money and that of their insurance risk pool. Even when, such as in the case of a high-deductible health plan, consumers first spend 100% their own money, price transparency is a major issue where there has been regulatory progress. Consumers need to understand the full extent of pricing and quality to determine value before purchasing health services. These facets of U.S. healthcare also limits the potential for a consumerism-based health system improvement strategy.
Realizing the societal benefits of consumerism requires that patients have the ability to select healthcare providers and products that are of high quality and value. Unfortunately, there are significant barriers to this and to consumer choice in the event that a patient does seek higher quality care elsewhere. Solving these issues are critical to advancing U.S. health system performance.
Conclusion
The current healthcare market in the United States is not conducive to the same consumerist characteristics found in other markets. The lack of true competition, the difficulty in assessing quality, the opacity of pricing, and the urgency and necessity of many healthcare decisions all contribute to a market structure that fundamentally differs from traditional consumer markets.
While efforts to increase transparency and patient engagement in healthcare decision-making are laudable, it's crucial to recognize that healthcare cannot be treated as a typical consumer good or service. The complexities of medical care, the high stakes involved in health decisions, and the unique market dynamics of the healthcare industry all point to the need for a different approach.
Rather than forcing a consumerist model onto healthcare, policymakers and healthcare leaders should focus on creating systems that ensure access to high-quality care, promote evidence-based practices, and address the underlying factors that drive healthcare costs. This may involve a combination of market-based solutions and regulatory oversight, tailored to the unique characteristics of the healthcare sector.
Ultimately, the myth of consumerism in healthcare serves as a reminder that simplistic market solutions cannot address the complex challenges of our healthcare system. A more nuanced, healthcare-specific approach is needed to improve quality, accessibility, and affordability for all patients.